This is according to new figures from the Office for National
Statistics, which noted a sharp rise in the number of people striking
out on their own.

But becoming self-employed can be a daunting prospect. As well as
running your business, you need to keep up with your legal and tax
responsibilities. We have compiled a checklist to help you get ahead in
self-employment.

1. Register with HMRC

As a self-employed person you will be liable to complete a Self
Assessment tax return. Registering as self-employed with HMRC should be
your top priority. You must register by 5 October following the end of
the first tax year for which you need to file a Self Assessment tax
return. If you fail to do so by this deadline you could receive a fine.
You can register online or over the phone; you’ll need your National
Insurance number, along with your home and business details.

You will also need to sign up for a Government Gateway account in order
to file your tax return. It is important that you do this well in
advance of your first Self Assessment deadline, as the process requires
HMRC to post you an activation code.

2. Keep records

As a self-employed person you are legally obliged to keep adequate
records. In practice, this means holding onto your receipts and
invoices, along with your bank statements, and ensuring that these are
filed in a suitable manner. You should definitely consider investing in
bookkeeping software to help you manage your records. We have compiled a
roundup of the best online bookkeeping software.

3. Make payments on time

It is vitally important that you make payments to HMRC in a timely
manner. Missing deadlines will result in financial penalties. There are
two key Self Assessment tax deadlines: 31 January, and 31 July. On 31
January of each year you will have to make your ‘balancing payment’,
plus your first payment on account, with the second instalment of the
payment on account coming due on 31 July. Read more about the payment
on account.

Additionally, you will be required to make Class 2 National Insurance
Contributions and, depending on your income, sometimes Class 4. You
should set up a direct debit to make these payments in order to ensure
that you do not fall behind; you can choose to pay either monthly or
every six months.

4. Name your business

Many self-employed people choose to trade under their own name but,
depending on circumstances, you might alternatively choose to adopt a
trading name. Before naming your business you should make sure that you
are not using a ‘sensitive word’ as defined by
Companies House. You may also not use the words ‘Limited’, ‘Ltd’, or
LLP, unless you set up a limited company or limited liability
partnership.

5. Understand the rules around hiring

Being a self-employed sole trader doesn’t mean that you can’t hire
people – it simply means that you are solely responsible for the
business. Many self-employed people hire employees to help them operate,
but it is important that you are aware of the rules around employment.
Use our interactive infographic to find out more about hiring your
first employee.

6. Get finance

Financing your business is one of the key challenges facing any newly
self-employed business owner. Even if you are not taking on office space
or immediately hiring people, there will likely be costs associated with
starting to trade. Luckily, there is a growing range of potential
sources of funding. Read our guide to finding finance for your
business.

7. Get support

Remember that you don’t have to go it alone. There is a range of support
available for self-employed people and those setting up businesses for
the first time – and, importantly, much of this support is free.
Unfortunately, though, awareness of many of these schemes is very low.
Read our guide to five of the best small business support schemes in
the UK.